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BOSTON — A magistrate judge in U.S. District Court in Massachusetts called a lawyer’s contingency fee agreement excessive and slashed a fee of $288,750 for work representing two whistleblowers in a ship pollution case to a $50,000 flat fee. In an April 22 order, Magistrate Judge Robert B. Collings called the proposed fee to Zack Hawthorn of Hawthorn & Hawthorn in Beaumont, Texas, “unethically excessive” and said the $50,000 total is the “outer limit of reasonableness.” USA v. Overseas Shipholding Group Inc., No. 1:06-cr-10408 (D. Mass.). An earlier order required court approval of legal fees over $10,000 and prosecutors also filed documents objecting to Hawthorn’s fees. Collings’ opinion also noted that his award to Hawthorn would have been lower if he hadn’t applied the deferential standard the courts give to lawyer’s contingent fee agreements. A dozen whistleblowers each collected $437,500 for their role in a case that led to a $27.8 million criminal fine for vessel pollution and false pollution log entries against Overseas Shipholding Group Inc. (OSG). The fine was part of a plea agreement that resolved criminal cases in five federal courts that were consolidated in Massachusetts. According to a U.S. Department of Justice statement in December 2006, OSG will also pay $9.2 million to fund marine environmental projects. Hawthorn, whose contingency fee agreement with two clients would have given him 33% of each client’s award, said he plans to appeal Collings ruling. “No party has objected [to the fee agreement, so] there’s no controversy before the court,” Hawthorn said. “The contract was entered into in Texas regarding activities that occurred in Texas. I don’t know how a judge in Boston, Mass., has jurisdiction over that.” Collings wrote that the fact that a client is willing to stand by a contact with a lawyer is “relevant but not controlling.” He also noted that the Filipino defendants “lacked the language and knowledge of the American legal system to negotiate.” A separate case continues in the Eastern District of Texas, and Judge Collings stayed Hawthorn’s award for 60 days to allow the Texas federal court to decide if Hawthorn’s court appointment to represent one of the same whistleblowers in that district bars him from receiving another fee for representing that client. USA v. Jho, No. 1:06-cr-00065, (E.D. Texas). Hawthorn said his clients were whistleblowers in the Texas case, not the five consolidated in Massachusetts, so the contingency fee agreement was necessary to cover his expenses and risk while representing them in Massachusetts. Given the jurisdictional challenges, it was far from clear that his clients would prevail in Massachusetts, Hawthorn said. “My clients were not able to hire somebody on an hourly fee basis and pay a retainer,” Hawthorn said. “How else would they have access to a court other than through a contingent fee. I don’t understand.” Hawthorn also said his clients may not have collected anything from the Texas case because the judge dismissed the Act to Prevent Pollution from Ships claims, which give rise to whistleblowers award. The decision is on appeal to the 5th Circuit. USA v. Jho, No. 06-41749 (5th Cir.)

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